Innovate UK Investor Partnerships: Investor Selection August 2023

We are seeking investor partners who want to invest in high growth potential micro, small and medium-sized enterprises (SMEs).

Your organisation must be an investor or be able to demonstrate that you can directly facilitate investment.

To be selected you must demonstrate that you:

• are a credible investor, or can facilitate investment, with a clear investment strategy aligned to the Innovate UK plan for action for the future economy and have the ability to generate returns and add value to your portfolio businesses beyond financial support
• have the capacity to invest in companies that are successful in their application to the investor partnerships programme
• either have the capacity to follow your investment or to encourage other investors to fund further rounds of investment as and when required
• have the capability to successfully transact investments and manage your portfolio
• are in a position to lead the investment

Applications will be assessed and subject to due diligence checks by Innovate UK, before being considered by Innovate UK’s Investor Selection Panel.

SMEs will be able to apply for grant funding for a proportion of their eligible project costs, aligned with your investment into the business, through a series of competition rounds.

The process for identifying and assessing SMEs is described in the competition brief for each round of the future economy investor partnership programme. In all cases it will require the SME to apply through our Innovation Funding Service to a specific competition.

The SME’s application will be independently assessed to identify the highest quality project proposals that fall within the scope of the future economy investor partnership programme. We will inform you and the applicant whether we can offer grant funding to the business.

The grant funding will be subject to completion of our project setup process that includes checking the viability of the project and the eligibility of the costs to be covered. It is also subject to completion of your investment.

Innovate UK has allocated up to £80 million to fund innovation projects, aligned with investment from investor partners. Funding will be offered through regular rounds of the SME competition from July 2022 to July 2024. This competition does not provide funding to the applicant investor.

Potential SME applicants will be able to apply for grant funding for feasibility studies, industrial research and experimental development projects:

• feasibility studies can have eligible project costs from £50,000 to £300,000, can last between 6 and 12 months and will have grants of up to 70%, with at least the same amount of aligned investment from or led by an investor partner
• industrial research projects can have eligible project costs from £100,000 to £1 million, can last between 6 and 24 months and will have grants of up to 70%, with at least the same amount of aligned investment from or led by an investor partner
• experimental development projects can have eligible project costs from £250,000 to £2 million, can last between 12 and 24 months and will have grants of up to 45% for micro and small businesses or up to 35% for medium sized businesses, with at least twice the amount of aligned investment from or led by an investor partner

Investor partnerships are aimed at supporting SMEs that seek support for R&D projects through Innovate UK grant funding and that also seek aligned investment from investor partners.

To be an investor partner, you must demonstrate credibility, capability, capacity, commitment and alignment of interest to the scope of the investor partnerships future economy programme.

SME projects must lead to new products, processes or services that are significantly ahead of others currently available or propose an innovative use of existing products, processes or services. It can also involve a new or innovative business model.

We are looking to support projects that focus on the future economy areas included in the Innovate UK plan for action. The broad theme areas are:

• net zero
• health and wellbeing
• next generation digital technologies and technology families

Innovation and ideas can come from anyone and anywhere. We want to see investments unlocked for the diverse and extraordinary talent in the UK. We are encouraging diverse applicants and inclusive project applications, pushing beyond the status quo.

We encourage innovation involving communities that are typically under-represented, including:

• from regions that have historically accessed lower levels of investment (outside London, Oxford and Cambridge)
• ethnic minority groups
• women and other marginalised genders
• disabled people
• people with non-traditional education backgrounds

To support this, we also have a targeted theme on equality, diversity and inclusion (EDI).

The investor partnership programme will be focused on specific themes for the future economy areas that include:

Net Zero

• capital intensive technologies
• power – particularly offshore wind, civil nuclear, hydrogen, carbon capture and storage, and whole systems integration
• heating and retrofit
• critical circular materials
• battery technologies for transport and energy storage (Faraday Battery Challenge)
• mobility – no longer in scope as funding has been fully committed in earlier rounds
• resource efficiency for materials and manufacturing – no longer in scope as funding has been fully committed in earlier rounds

Health and Wellbeing

• innovative solutions to health and healthcare challenges (Biomedical Catalyst)
• advancing life-changing cancer therapeutics, focussed on immunotherapies and paediatric oncology (Cancer Therapeutics)
• the application of extended reality for digital mental health, including immersive content that could be delivered as a digital mental health therapeutic in formal healthcare settings (Mindset)

Next generation digital technologies

• projects within the creative industries which are underpinned by innovative digital technology as well as sustainable innovations, such as circular fashion (Creative Catalyst)
• projects underpinned by artificial intelligence and machine learning which boost business productivity in four target industries
• projects underpinned by artificial intelligence and machine learning which boost business productivity in internal business processes
• projects that accelerate the adoption of trusted and responsible AI technologies by reducing bottlenecks during development and deployment of these technologies (BridgeAI)

No Limits (equality, diversity and inclusion)

• innovations from diverse founders or senior decision-makers that are from under-represented groups and are role models
• innovations outside of the future economy theme areas, including those that support under-served communities and groups

We are including new programmes which will be run as separate SME competitions in the following areas:

Create Growth Programme – Department for Culture, Media & Sport (DCMS)

• Innovation and investment in the creative sector, helping high-growth creative businesses to explore new innovative projects that will stimulate growth

Novel low-emission food production systems

• to create new sources of resource efficient, low-emission foods, particularly proteins, while delivering healthy and sustainable diets.
• progress emerging novel food production systems towards commercial viability with the ability to supply mainstream consumer markets.

Farming Innovation – Department for Environment, Food and Rural Affairs (Defra)

• developing ambitious late-stage innovative solutions, technologies, systems or approaches that will make significant steps towards improving productivity, increasing sustainability and resilience, and helping the agriculture sector move towards achieving net zero emissions by 2050
• supporting late-stage projects which are close to market and support adoption of opportunities which will benefit farmers, growers or foresters in England

All of these programmes are described in more detail on the Investor partnership website.

Innovate UK KTN held an online briefing event on Wednesday 6th September: click here to watch the recording.

If you would like to be connected with potential SMEs for investment, please contact Innovate UK KTN’s Investment team.